Economy

The Big Three don’t have a monopoly on the economic misery. My first question to the three executives was “name me three industries in the economy that aren’t hurting and couldn’t use $34 billion dollars”. They was stark cold silence. Everybody’s hurting in this economy. That was my first point.

 

My second point was, “why you guys and not a small business, the job engine of America, they could use the $34 billion but we know your names and you spent $15 million dollars to lobby Congress in the first nine months of the year, kind of an unfair advantage”. I know lobbying is protected under the Constitution, it should be, and I don’t fault them. But I look at the unfairness.

 

In the wake of Congress’ bailout spree, Congress needs to hold serious discussions about the use of taxpayer dollars to prop up failing businesses. While there are many causes for alarm in this saga, one of my specific concerns is the lack of transparency of the Federal Reserve’s various lending programs and the amount of taxpayer dollars being used to intervene in our financial markets. Beginning with the collapse of Bear Stearns in March of this year, I have consistently expressed these concerns. While I agree that Congress and the Federal Reserve must work closely together and consider all options to ease the current credit crisis, I think it is essential that taxpayers know and understand the risks and value of the collateral the Federal Reserve is taking onto its books.

The Associated Press reports this morning:

 The head of the FDIC said Tuesday the government needs to devise an “exit strategy” for its massive financial rescue plan to avoid artificially propping up banks and other institutions over the long term...

The far-reaching government guarantees extended under the rescue program -- now including $250 billion set aside for the Treasury to buy stock in U.S. banks, hundreds of billions in aid to giant financial institutions and hundreds more billions in special lending facilities to banks -- must be carefully assessed, Bair said.

On November 20th, I introduced a bill that would use free market incentives to help the auto industry. H.R. 7298 would offer consumers a $10,000 tax deduction when they purchase a new vehicle with final assembly in the United States.

 

The auto industry has a multitude of issues that need to be sorted out, but one thing is certain—they need to sell cars. This bill provides an incentive for anyone to do just that.

The questions by the members at the hearing were very substantive. I think the questions and the answers to the questions clarify quite a few misconceptions.  I think, as much as anything, instability in the financial system was undermining the economy. It wasn’t as evident to Main Street that the economy would have weakened substantially if there had not been an intervention. I thought Secretary Paulson did a good job of saying that. Stability has returned to the financial system and that should begin to stabilize the economy, which is very good news. Obviously there is a lot of concern about the foreclosures and the various programs.

 

This disturbing debate marks yet another chapter in what has become the troubling mark of this Congress.  The regularity and scope of these massive bailouts should astound any taxpayer, yet Washington continues down the road to federal intervention and ever-more public handouts to private industries.

 

While I am certain we have long since passed it, at some point a line must be drawn.  We can no longer ask taxpayers to postpone their own prosperity so that select businesses can maintain the costly status quo.  Printing billion dollar sums of cash each time an industry faces turmoil is not an economic solution; it is a moral hazard.

 

The funds from the financial rescue package are going all over the place. They forced a quick vote on something because they were convinced that they needed to implement a plan immediately.Now they realize that the plan they envisioned does not immediately address our economic problem, and it’s a plan that they perhaps should not have implemented at all, and now they are changing directions.

 

I think the biggest reality in this is the so-called “experts” got it wrong. This is definitely one place where everybody is kind of feeling their way along. My concern was the Administration’s attitude focused on doing something quick, rather than making sure it was right.

 

We members from Michigan are often criticized for our strong defense of the domestic auto industry.  It cannot be denied that the domestic auto industry is crucial to the economy in Michigan, but others fail to understand how critical this industry is to our national economy and our national security.  Some say, ‘go ahead and let the car companies fail, let the market work’ or ‘they did it to themselves so let them fail.’  These ideas fail to take into account the impact on our broader economy, the impact on our national security and the human toll exacted by inaction.

 

If you haven't applied for your bailout yet, what are you waiting for? The way the government's handing out money, why not jump on board the bailout train?

 

The World Newser, ABC World News' Daily Blog does a great job detailing how the Treasury Department is using the recently passed $700 billion appropriated for the "TARP," or Troubled Asset Recovery Program, to buy up bank stock.  As you will recall, Congress was sold on the bailout as a plan to buy up troubled assets, but that plan appears to be on a far back burner. That's one heck of a bait-and-switch.

 

Clearly I think that if we’re going to do another stimulus package, the small businesses in this country ought to be an important part of that because after all 70% of the jobs created in America are created by small businesses and a lot of them are struggling.

 

It has to do with the credit crunch, and them being unable to get loans from banks, it has to do with the fact that I think a lot of them are worried their taxes are going to go up. So that’s why the last thing we ought to do would be to increase taxes whether its capital gains taxes or any others.

 

I attended yesterdays Oversight and Government Reform Committee hearing hoping to ask the panel three essential questions: Who knew what and when, and what action did they take?  Today, Idaho’s mom and pop investors are losing their hard-earned savings in their retirement funds, while some corporate CEO’s have received golden parachutes.  Idahoans want to know if anyone is going to go to jail for causing this crisis. SEC Chairman Chris Cox indicated that is likely given the large number of prosecutions he has begun.  I hope he is correct.

American taxpayers are justifiably outraged when on the one hand they are asked to stomach billions in federal assistance for companies and then have to watch as corporate executives at those same companies spend thousands of dollars on lavish junkets for themselves.  Recent reports have cited a $440,000 weekend getaway held by AIG executives after they received $85 billion in taxpayer dollars.  This is unacceptable.  South Carolina families deserve accountability.  They deserve to know that their tax dollars are not paying for this type of extravagance.

 

The non-partisan Tax Foundation released their 2009 State Business Tax Climate Index earlier this week, and Minnesota was in the spotlight. Minnesota made the list of the ten WORST states for businesses, coming in at 41 - not exactly the place we want to be in today’s already sluggish economy.

 

The foundation notes, “The modern market is characterized by mobile capital and labor. Therefore, companies will locate where they have the greatest competitive advantage. States with the best tax systems will be the most competitive in attracting new businesses and most effective at generating economic and employment growth.”

 

Yesterday, the Education and Labor Committee held a hearing to examine how the current financial crisis is impacting workers’ retirement security. The news was striking.

Like schools, families, and businesses small and large, American workers and retirees are struggling because of the turmoil in our financial markets. Whether workers have a 401(k)-type “defined contribution” savings plan, a “defined benefit” pension plan, or personal retirement savings, everyone is seeing some effect from the present market downturn. These challenges are systemic.

From the beginning, Congress was delivered a flawed proposal.  The initial Paulson plan lacked sufficient transparency, accountability, and protections for taxpayers.  I was proud to stand with many of my colleagues as we worked to improve this legislation and keep our word to the citizens we represent.  They sent us here to make these tough decisions.

 

Our nation is confronted by a serious financial crisis. It is a crisis of confidence in our financial markets and a crisis of confidence in this government. While many are anxious about how we will confront this crisis, as I saw on the faces of my constituents this week, many more approach this moment with faith, not fear.

 

We will get through this.  We have confronted much greater challenges than this and I am confident we will restore our markets and renew our government.  But we must do so in a manner consistent with the principles that make America great.

 

    Mr. McCOTTER. I thank the gentleman from New Jersey for yielding. I also wish to take this moment to thank him for his strength of character and his depth of intellect and leadership on this issue.

   It has been said if you don't know where you are going, any road will take you there. Unfortunately, we find ourselves in such a situation, as America finds itself amidst a potential economic meltdown of its financial sector.

We are working in a crisis atmosphere of historic proportions.  We must stay objective and analytical to accomplish what's in the best interest of the American people; and we must stay focused, because this crisis compels a tight legislative deadline.